NEW YORK, May 17 (Reuters) - Whitefort Capital

Management is urging Arbutus Biopharma ( ABUS ) to stop issuing

shares and launch a strategic review this year to find a

potential partner for its hepatitis B virus treatment portfolio,

according to a letter seen by Reuters.

The New York-based investment firm owns 6.8% of the

Warminster, Pennsylvania headquartered clinical-stage

biopharmaceutical company and criticized the company for using

share sales to fund its hepatitis research in the letter.

This practice hurts investors through dilution, the

investment firm argued, adding Arbutus' hepatitis treatment

program could have more success by partnering with a larger

biopharmaceutical company that has relevant clinical expertise

and commercial infrastructure.

"We firmly believe that the Board must act with urgency to

end new share issuances, limit dilution from its 2016 Plan,

explore strategic options for its HBV (hepatitis) portfolio by

yearend and judiciously allocate capital until then," Joseph

Kaplan, Whitefort's co-managing partner wrote in the letter sent

on Friday.

An Arbutus representative did not immediately respond to a

request for comment.

The investment firm argues that continued share sales would

hurt Arbutus shareholders as they wait for the conclusion of

patent infringement claims against Moderna ( MRNA ) and Pfizer ( PFE )

related to their COVID-19 vaccines.

"Arbutus' share of patent infringement claims against

Moderna ( MRNA ) and Pfizer ( PFE )/BioNTech is potentially worth billions of

dollars, or multiples of the current Arbutus market

capitalization," Kaplan wrote.

Whitefort said it would vote against a proposal that would

increase the amount of shares issued under its incentive program

at the annual meeting next week.

The investment firm is also pushing for a different future

for Arbutus' portfolio of hepatitis therapies.

"We believe that the Company should hire a financial advisor

by the end of 2024 to explore strategic alternatives for its HBV

portfolio, including potential license and collaboration

agreements and other strategic partnerships," the letter said.